For-profit colleges are notorious for not being open about “the real costs of attendance” and how the complex machinations of student loans really work out in both the short and long-term.
What makes it all completely difficult is how opaque both colleges and private student loan providers are about what you’re potentially getting into. Especially so, when students are “tricked” into taking out more expensive private loans to cover the total tuition cost; unaware of the fact that federal loans offer better repayment options – like deferments and income-based repayment plans.
These students also mistakenly believe that college is a guarantee for employment. True, the average college grad is more employable and earns more than his high school grad counterpart, but this is only on a general level. These statistics reflect the average but don’t apply to you as a person, meaning that it falls squarely on your shoulders to choose a course that you know will put you in a field where jobs are plenty.
This is why colleges need to reveal more about themselves than ever before. Schools must more aggressively provide loan counseling even as they market these same loans to pay for tuition, which federal law already provides.
The current administration is also pushing for colleges to provide standardized sheets that let students see all aid they are receiving, the debt they incur and the aid they are eligible for. We can also expect to see government “scorecards” that rate each college by their affordability, graduation rates and the average ability of graduates to pay off their student loan debts.
And then there’s a pending Senate bill that will require lenders and colleges to teach students about the differences between federal and private loans. This includes the borrowing options available to them, which is something most private lenders “keep mum about” in order for students to take out expensive loans without knowing what they are getting into.
The main objective: for all students to understand their rights and obligations before they “borrow themselves into debt“.